I have an early version of the Go-Power water brake dyno, back when the company was based in Palo Alto California. Dad and I got a tour of their facility back in the late 1970's when he owned the machine- - - -I inherited it several years later. It uses a load cell that resembles a torque converter, and it's filled with water to put a load on the engine. The torque output at the flywheel is measured, and HP is calculated from RPM VS torque, with fudge factors for relative humidity, air temperature, and barometric pressure. I've had engines of up to 700+ HP on it at times.
Jerry

"It is better to be silent and be thought a fool than to speak and eliminate all doubt!" - Abraham Lincoln
Cringe and wail in fear, Eloi- - - - -we Morlocks are on the hunt!
There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self. - Ernest Hemingway
Love your enemies and drive 'em nuts!